7 habits to help stay financially healthy in 2021 – Forbes Advisor INDIA
Financial stability stems from healthy financial habits. Maybe you think there’s never a good time to start learning more about finances and your own financial health. While it may seem complicated at first, taking a systematic approach can help you build habits that will benefit you in the long run.
Here are seven habits you can adopt to lead a financially healthy life in 2021.
1. Save money
There are often questions about why you should register this need for an answer. Do you have enough money for:
- The things you need now
- The things you want in the future
Well, the easiest way to save is to spend less than what you earn, which is easier said than done. Here’s how you can get started:
- Save at least 10-15% on average to maintain your lifestyle, even if you retire.
- Set that money aside as soon as you get your paycheck. It’s best not to even think of this amount as your own. Whatever your purchases or needs, you then make them with the rest of your salary, inevitably forcing you to prioritize.
- If there is an emergency or unforeseen expense that is taking your savings down, be sure to pay that money back next month, plus the money you were supposed to be saving anyway, and budget accordingly.
2. Keep an eye on your spending
Think back to your early years of money management: when you started your career and kept a close eye on your spending habits. Well, now you are a few years away and you might be out of the habit. Here’s how you can keep things under control:
1) If you don’t know what’s essential and what isn’t, the best way to find out is to start tracking your spending. It is much easier now since Indians are slowly adopting payments made electronically. Of course, don’t be obsessed with this; it’s okay to check your spending even once a month.
2) If you are having difficulty doing it proactively, you can use an app. There are many that can track your spending and send you transaction messages and emails.
This will give you a better understanding of where your money is going, so you can hold yourself accountable and figure out what you can save on. It can also help you notice if you are spending a lot.
3. Make a plan and stick to it
The basic point of a budget is planning, not limiting. If you want to get the most out of your money, which is fundamentally the essence of personal finance, you need to plan things out:
1) Plan how much you will spend each month, based on how much money you have after setting aside your savings. Do not exceed this budget.
2) Plan things like big purchases and factor in unexpected expenses like a hospital visit or a flat tire by adjusting your budget or dipping into your savings.
4. Don’t be impulsive about purchases
This is one of the hardest things to do. Impulsive doesn’t just mean buying the latest smartphone because it was Payday; it means spending excessively when it was not necessary to do so. Make Small Sacrifices for a Bigger Reward:
1) Record where you can. Prepare meals at home or eat leftovers, instead of ordering, or wear clothes for longer; don’t buy a new jacket when the old one is still ready to go. Small choices like this go a long way.
2) Plan. Plan your major purchases in advance. Keep a wish list and review it often to see if you really want to splurge on something.
3) Go for zero cost. Using “buy now, pay later” solutions or monthly installments for more expensive purchases helps you spread the cost of your essentials and is a good way to stick to your financial plan.
This money is what you could have saved otherwise. You can only achieve financial stability by limiting your spending. We can all slip from time to time, and that’s okay, but impulse buying should be the exception, not the rule.
5. Pay off your debts and loans
You can’t start from scratch when carrying financial baggage that is holding you back. Like people, not all debt is created equal. High interest debt, like credit card debt, is not the same as low interest debt, like student loans:
1) Keep track of what you owe at any given time and make your payments on time.
2) If you are in debt, always pay off the debts with the highest interest rates first.
3) Check if you have excess cash and write off the loans. Nothing better than a life without debt.
6. Invest in the future with low risk financial instruments
If you’re wondering who this person is that you were saving all that money for, the answer is you: you when you want to take a vacation next year or you when you want to buy a car the next year.
People in their 20s and 30s think investing is not a priority, but one thing to take away from this pandemic is that it doesn’t hurt to be prepared, but it can hurt if we aren’t. . Start investing some of your savings for a rainy day or a well-deserved reward or you are free to make new career choices at 45 without risking financial stability:
1) You don’t have to be the “Wolf of Wall Street”. Invest through low risk investment options that give you consistent returns and are also tax deductible, like the public provident fund.
2) Stocks aren’t the only things worth investing in. You might consider investing in instruments that will save you money over time, such as a good health insurance plan with extensive coverage so you don’t have to dip into your savings and pocket in the event of a loss. unexpected illness.
3) Obtain term insurance without rider as soon as you have dependents. In general, those available online are sufficient and opt for this until you reach retirement age. Securing the future of your loved ones is a simple and appropriate start to better financial planning.
7. Don’t wait until the last minute
When it comes to your finances, prevention is better than a cure should be your strategy.
1) Don’t just pay off your loans on time. Pay everything you can on time, whether it’s your rent, your phone or internet bill, or whatever else you owe. If you feel like this is causing you more trouble than others around you, set up auto debit or reminders on your phone. It really helps to maintain a firm routine for your finances. Using digital tools can help you plan better.
2) If your billing cycle is decreasing at a time when you know you won’t have the money, talk to the company in question to change your billing cycle. This could help you avoid unnecessary stress and ensure that your credit score won’t be damaged by late payments.
3) Remember the last time you filed closer to the deadline and ended up making random investments? Plan your investments in advance and don’t wait for mail from your employer’s human resources team asking you to file your taxes to arrive in your inbox.
At the end of the line
To be successful in the financial planning journey, it is important to start. A simple personal finance planning checklist will help you make sure your finances are in much better shape, so you’re ready for whatever new challenges lie ahead.